Thousands of retired couples who put their assets into family trusts should abandon any hopes they have of getting residential care subsidies for rest-home living following a recent court ruling, a trust law expert says.

The Court of Appeal recently upheld a decision by the Ministry of Social Development to assess an applicant's eligibility for a rest home subsidy on the basis of both her and her husband's assets held in a trust, rather than just her half.

For many retirees, this means that a proportion of their assets held in a family trust may not be excluded from means testing, as previously thought. At issue was the value of assets gifted or transferred into a family trust each year until five years before an application for the residential care subsidy.

It was widely believed a couple could transfer up to $54,000 a year - $27,000 each - before those assets counted against their eligibility for the subsidy. However, the Court of Appeal ruling confirms it at the level $27,000 combined.

Christchurch family trust specialist, Ferne Bradley, said that Work and Income had previously never questioned whether couples could make the same level of gifts as a single person but were now taking a broader view.